The Business of Outsourcing Certifications

It is highly likely that you’ve sought professional development to improve your vendor management and outsourcing management skills. There are very, very few resources available to vendor management and outsourcing professionals.  As a result, you’ve probably encountered a few companies out there that specialize in training for vendor management professions.  Have you noticed the pricing?  Developing certifications for outsourcing professionals is definitely a big business.  Is it worth the investment?  If so, which should you select?  Let’s delve into what’s available and whether it is worth the money.

There are a two primary professional outsourcing certifications available: the International Association of Outsourcing Professionals’ (IAOP) Certified Outsourcing Professional (COP) and the Customer Operations Performance Center’s (COPC) Vendor Management Vendor Management Organization Coordinator (referred to as the VMO coordinator).

IAOP Certified Outsourcing Professional

The IAOP touts itself as the leading outsourcing certification organization.  Indeed, they are the only organization with significant reach within the advisor, client, and vendor community (over 40,000 members).  The organization is young, founded in 2005, and is run by a single chairman, Michael Corbett, and a strategic advisory board made up of a who’s who of advisors, vendors, and clients, including Booz, CB Richard Ellis, American Express, Accenture, Liberty Mutual Insurance, PWC, and Accenture. There are also a wide variety of official committees devoted to developing the IAOP’s reach and goals with a similar footprint of big name firms.  These networking opportunities provide outstanding value.

The COP certification requires a professional experience, education/training, and completion of an exam – 150 points must be earned.  In terms of professional experience, the application requires the candidate detail experience in 10 end-to-end aspects of managing and outsourcing engagement.  In each of these 10 categories, the candidate earns 5, 10, or 15 points based on the number of projects and companies at which the category’s experience has been earned (5 for one project, 10 for two projects, and 15 for 3 projects and two companies).  Earning the 50 minimum required points is relatively easy if you have worked in the vendor management or outsourcing space for a year or two.  The requirement to demonstrate experience gained at more than one company to earn the 15 point award in each category means that most people who have earned their experience at a single company will be limited to 100 points.

Earning education points (up to 100) is far more difficult.  A post-graduated degree in a business-related field is worth 25 points.  Completing the “COP Master Class” is worth 75 points.  Passing the COP exam is with 25 points – something you’ll need to do anyway if you want the certification.  In short, many people will be required to take the COP Master Class unless your outsourcing experience is broad and deep.  It is important to note that vendors, advisors, and clients all take the same exam and master class.

The COP Master class is offered in two formats: a four day $3,500 ($3,000 for members and less for member’s with corporate status) in-person training class or an online $2,995 training class requiring 35-40 hours of work.  No doubt, the “budget” online training class is more popular because of the lower cost, especially given the cost of travel expenses.  Of course, those who forgo the in-person class lose the greatest value of the class: networking.

The COP exam is a 200-question, 3.5 hour online exam requiring that you get 70% of the questions correct.  Material is taken directly from the Outsourcing Professional Body of Knowledge (OPBOK), a 321 page PDF available to members that covers end-to-end outsourcing from client, vendor, and advisor perspectives.  Th OPBOK was last published in January 2008 and is on version 8.

The COP certification is costly to earn.  Here is a rundown of costs

1. $395 – Membership in IAOP
2. $600 – Application and Exam
3. $3,000 – COP Master Class (in the USA, prices vary in other countries) – required if you don’t earn sufficient points in other areas
4. $800 – Governance Workshop (optional), provides 15 more points to toward the COP certification
5. $250 – Online Exam Prep Workshop

(Note: the IAOP offers a bundle of the Master Class, Governance Workshop, and Online Exam Prep Workshop for $4,300)

So, here’s how it breaks down assuming all candidates take the Online Exam Prep Workshop and a post graduate degree:

If you can earn 100 points through a combination of experience, you will not take any additional classes and will pay $395 + $600 + $250 = $1,245.

If you can earn 85-99 points through a combination of experience, you will take the governance workshop and pay $395 + $600 + $250 + $800 = $2,045.  You could take the master class instead, for an additional $2,200.

If you can earn 50-84 points through a combination of experience, you will take the master class and pay $395 + $600 + $250 + $3,000 = $4,245.

If you have experience worth less than 50 points, you can’t qualify for certification because the combination of post graduate experience, classwork, and the exam cannot exceed 100 points.

If you do not have a graduate degree, here’s how it looks:

If you can earn 125 points through a combination of experience, you will not take any additional classes and will pay $395 + $600 + $250 = $1,245.

If you can earn 110-124 points through a combination of experience, you will take the governance workshop and pay $395 + $600 + $250 + $800 = $2,045

If you can earn 50-109 points through a combination of experience, you will take the master class and pay $395 + $600 + $250 + $3,000 = $4,245

If you earn less than 50 points, you can’t qualify for certification because the combination of post graduate experience, classwork, and the exam cannot exceed 100 points.

Of course, the IAOP has certified other organizations to provide training through it’s Bridge Program.  Colleges, companies, and private trainers pay the IAOP to first assess their classes for $1,500 for the first 3 courses and $250 for each course thereafter.  Courses must be recertified every 3 years.  So far, Duke offers 2 courses (only one provides 25 COP designation points), the University of St. Thomas in Houston offers 1 class worth 25 COP designation points, and Open Source Development LTD offers 3 classes, none of which count toward COP certification.  Luckily, the IAOP provides points if you attend one of their conferences.  The World  Summit ($1,400 in 2010) is worth 8 points and the Asia-Pacific ($1,200 in 2009) and Europeans ($? in 2009) summits are worth 6 points each.  The Global Human Capital Forum ($700 in 2009) provides 3 points.

Once a member, 20 continuing education credits are required each year.  You can do so by taking the classes (why you would retake classes, I don’t know) or attending the conferences above, as well as attending IAOP chapter meetings.  So, unless you can also speak or teach classes, which is worth 2x the normal 1 credit per hour rate, you’re going to need to take a class or two each year to keep your COP certification.

Phew.  That’s complex.

The IAOP COP certification all quickly adds up to a pretty spendy proposition if your company isn’t sponsoring.  Essentially, count on spending $395/year + continuing education credits you need + certification and, ever two years, recertification for another $50.  Throw-in some travel to attend conferences and classes, and you’re talking a pretty significant investment.

If your company is sponsoring you and not taking a corporate sponsorship, it adds up if a number of people need certification – after all, how many people manage outsourcing vendors at your company?  If you work for a reasonably large company too stingy to take out corporate membership (price is negotiable), then you could easily be talking $60,000+ for the first year for 15-20 people, and another $20,000-$30,000/year thereafter.  And then, what do you have?  A group of people who understand outsourcing 101?

Have no doubt this: The business of outsourcing certification is big business.  Take 40,000 members (the current stats are “100,000+ members and affiliates”) spending $2,000/year annually, and you’re talking about IAOP being a $80M business.  And, that’s just the member dues, fees, and classes.  Add to that master COP training (for train the trainer) and, as any impartial observer would note, vendor sponsorship fees.

That’s right, vendor sponsorship fees.  Look at the 2010 World Summit Agenda and note that the opening is sponsored by Accenture, numerous networking events are included (where vendors, at least at other events, pay for the opportunity to mingle), and the event itself is prominently sponsored by Accenture, CBRE, Colliers International, and Booz in the literature.  Browse the IAOP website, and you’ll find advertisements from a number of vendors.  On my screen right now, there’s NCS, Insigma, DataPipe, North Dakota Chamber of Commerce, Infosys, and DNL Global.  Each time I browse another page, another group of vendors’ ads revolve.  The IAOP takes the most bizarre move in actually rating the top 100 vendors.  Why bizarre?  They are supposed to support the industry, so why do they only rate vendors and not their other constituents?  Why not customers or advisors?  Oddly, comparing the Black Book’s top 50 in 2009 (which, as we’ve analyzed, is fairly unbiased, although a poor example of a good analysis) to the IAOP’s top 50 in 2008, 30 of the Black Book’s vendors are not in the top 50.  Why are the ratings so different?  I don’t know, but could it be that a leadership partially made-up of vendors has some biases that cannot be removed?

COPC’s VMO Coordinator

The COPC takes a completely different tack and a more narrow niche.  The COPC focuses on customer transaction processing, including call center and backoffice processing.  It would not be appropriate to apply to IT outsourcing categories.  The focus is actually on certifying an organization to one of two standards: the Customer Service Provider (CSP, for vendors and internally run operations) or Vendor Management Organization (VMO, for vendor managers).

The COPC was founded in 1996 and built it initial CSP standards in collaboration with a number of companies who saw a mutual need for a performance standard.  They are based on the United States’ Malcolm Baldrige National Quality Award.  It is an independent, privately run company that does consulting-type work.  In 2001, when outsourcing began to influence how operations were managed, the COPC developed the VMO standard.  The standards address the specific processes that CSPs and VMOs must use to meet the expectations of internal stakeholders, vendors, and customers.  So, unlike the IAOP COP, which focuses on high-level outsourcing “what’s”, the COPC’s CSP and VMO standards address the detailed “how’s”.  For example, the COPC addresses how to audit vendor quality, how to forecast transaction volumes, and how to handle business continuity events.  In short, the COPC focuses on operation process excellence and the activities that clients and vendors must take to be successful.  The list of clients is impressive, although not as broad as the IAOP.

In terms of individual “membership”, it is not a professional development model, like the IAOP, the PMI, or other organization.  There are no annual dues, no complex certification calculations, or continuing education obligations.  Instead, you simply need to attend a COPC VMO or CSP Coordinator training class ($3,800), which is a five day class that concludes with a lengthy exam.

The COPC doesn’t hold conferences, so the networking opportunities are fairly limited.  There are also no vendor sponsorships.

The COPC also tends to push it’s auditing services, which ensure your organization meets the the COPC standards.  Many companies achieve the certification and some take the learning and don’t bother with the certification (and probably don’t get the same results, either).  The auditing process takes more than a year for most companies, which begins with an initial analysis of the company’s/vendor’s performance against the standard, and then continues with improvements that are necessary until the organization passes an audit.

The cost of certifying an organization?  It probably runs north of $100,000, plus the need to train most vendor managers or vendor resources. That excludes internal efforts to reengineer processes to meet the standard.  However, that small amount of money pales against the cost of a large BPO operation and operational benefits it can gain.

Other Options

Carnegie Mellon University’s IT Services Qualification Center (ITSqc) recently released a standard that is akin to the legendary CMM models for which it is famous.  The development of the new standard is likely due to the increased nature of outsourcing in the IT area, which has eliminated the need for clients to seek CMM certification, but also challenged vendors who deal in a many-to-one model with clients, who frequently have little desire for CMM restrictions The new standards are the eSCM-SP (for vendors) and the eSCM-CL (for clients).  The list of certified vendors isn’t very long, and there are no CL certifications.  It is also an organizational certification, not an individual certification.

Frankly, given the apparent complexity of graphics like the one below, it is hard to believe client organizations will be clamoring for it:

Final Analysis

To some, this is an apples and oranges comparison.

The IAOP’s individual membership focused on outsourcing basics, along with its broad networking opportunities definitely creates some advantages.  The COP master class teaches something taught nowhere else (except the school of hard knocks), but focus on the client-advisor-vendor more than the operations.  Modeled after PMI, ISM, or CPA organizations, it’s high initial cost and recurring costs are hard to digest ($2,995 for an online class?).  Also, the IAOP’s decision to dip into vendor sponsorships indicates some bias.  I am currently a member without the COP certification, and I can say that without little doubt, most chapter meetings are vendor presentations, not client discussions.  It’s terribly difficult to have a balanced discussion with so much vendor marketing surrounding you – something the IAOP is finally realizing as the create customer-only networking events during the conferences.  However, there is no resource like the IAOP.

The COPC’s VMO and CSP coordinator certifications are focused on how to manage operations effectively and efficiently.  They create results, but only if the organization embraces the broader certification, which is far from cheap and can require extensive reengineering, something the some clients or internal stakeholders may have little appetite for.  I am a registered COPC VMO Coordinator and think extremely highly of the COPC and the standards.  I believe the COPC standards should be adopted by any medium-to-large operation focused on BPO activities because they create processes for vendor management, something that most VMO’s completely lack.  However, the lack of networking opportunities and the COPC’s self-interest in auditing against standards can be a turn-off to some.

Either way, there is no doubt that individuals working in the outsourcing space need development opportunities.  Both organizations bring tremendous value to their members and the industry.

So, here’s my recommendation:

1. If you’re part of an organization of any size with IT outsourcing responsibilities with sufficient budget, require your VMO and vendor account personnel to obtain IAOP COP certification.  Best yet, host a class and have your vendor managers and vendor account teams take the classes together!  That’s a meaningful investment.
2. If you’re part of an organization of substantial size with BPO responsibilities and sufficient budget, implement the COPC VMO standard and require your vendors to achieve the CSP standard as part of the RFP/negotiation process. Also, require key personnel to obtain their CPO certification.  Not all at once, clearly.  Your governance resources should take the IAOP governance workshop and the IAOP CPO certification, while your vendor managers should focus on the COPC VMO, and later cross-train everyone.
3. If you’re part of an organization of moderate size with BPO responsibilities and moderate budget availability, require your VMO and vendors to take the COPC training classes, but don’t bother with the certification unless you really want to excel and have the budget/time.  Again, require personnel to obtain their CPO certification.
4. If you’re part of an organization of small size with BPO responsibilities, or simple an individual looking for outsourcing skill development without company financial support, the IAOP courses are ideal.  Get membership and look for ways to take the COP Master Class.
5. If you’re an individual looking for vendor management skill development, the COPC’s VMO class is the one for you.

What are your thoughts?  Leave your comments below and share your knowledge with others.

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Related posts:

1. Offshore Outsourcing Vendor Governance Organizations
2. Outsourcing DIY: Less Expensive, Less Scary, More Effective
3. Vendor Management Organizations Are a Bad Design
4. An Outsourcing Vendor’s Business Continuity and Disaster Recovery Plan
5. Offshore Outsourcing RFPs: Are They Encouraging Copy and Paste?